Edelweiss ARC to pump Rs 600 crore into Bharati Shipyard over two years

Edelweiss ARC to pump Rs 600 crore into Bharati Shipyard over two years

Edelweiss Asset Reconstruction company (ARC), which had picked up a majority of Bharati Shipyard loans last year, plans to infuse Rs 600 crore into the company in tranches of Rs 50 crore over the next two years.

Edelweiss Asset Reconstruction company (ARC), which had picked up a majority of Bharati Shipyard loans last year, plans to infuse Rs 600 crore into the company in tranches of R50 crore over the next two years.

Confirming the development, Siby Antony, MD & CEO Edelweiss ARC, told FE that the first tranche of R50 crore will be infused next week. He added that the money is part of R600 crore it has raised for Bharati Shipyard. “The money will be used for working capital requirements to complete a couple of ships that have been left half-built due to lack of funds,” Antony said, adding that completion of the first ship will bring around R120 crore to the company.

He added that there are around 12 incomplete ships for which the ARC plans to infuse R600 crore over two years. “This is apart from eight coast guard vessels the company has to build,” he said.

Earlier this month, agencies had reported that Bharati Shipyard was among nine shipyards shortlisted for a R60,000-crore indigenous aircraft carrier for Indian Navy. According to another person familiar with the development, the company is in no position to bid for the tender as it has very little cash to offer as guarantee.

In a regulatory filing on Tuesday, the company said its net worth as on March 31, 2015, has been eroded fully and its reference with the Board for Industrial & Financial Restructuring (BIFR) has been registered. It added that Edelweiss ARC is assisting the company in the revival by way of restructuring and

additional lending.

The BIFR website explains that its objective is to deal with problems of industrial sickness with regard to crucial sectors where public money is locked up.

FE had reported last month that Edelweiss ARC plans to restructure around R4,500 crore of Bharati Shipyard debt, in line with a directive from the Bombay High Court, which asked the ARC to submit a financial restructuring plan by September. Meanwhile, public sector lender Punjab National Bank has offered loans of R482 crore to Bharati Shipyard for sale to ARCs.

The corporate debt restructuring (CDR) package of Bharati Shipyard had failed in the first quarter of FY15, following which a consortium of lenders, led by State Bank of India (SBI), sold its loans to Edelweiss ARC in July. Eleven lenders out of 23 sold their debt amounting to R4,200 crore. Bharati’s debt was referred to the CDR cell in December 2011 and lenders agreed to recast the company’s loans in April 2012, offering them a moratorium on interest for 18 months and a reduced interest rate of 11%.

Worried that its attempts to recovery money from Bharati Shipyard may be jeopardised, Edelweiss ARC in May appealed against a recent Bombay High Court ruling that allows bilateral settlements between the company and its unsecured creditors.

Nine unsecured lenders had filed separate winding-up petitions against Bharati Shipyard and the court had directed the parties to settle claims bilaterally. In an order dated March 10, the court observed that Bharati Shipyard had agreed to pay R30.6 lakh to one of the petitioners and that the petitioner had accepted the offer.

It also said in the event of the company defaulting, the winding-up petition shall be revived without ‘reference to this court’.

In Q4FY15, the Mumbai-based company posted a net loss of R540 crore. In FY14, it reported a net debt of R5,393 crore. The company is promoted by managing directors Vijay Kumar and Prakash Chandra Kapoor who hold 11.38% each in the company and by Bharati Infratech Projects with a 32% stake.